Energy Prospectus

I just finished updating my forecast/valuation model for Plains All American Pipeline (PAA).

PAA is an MLP. If you shy away from MLP's, you can get the same quarterly divided from PAGP which is a C-Corp. Just keep in mind that C-Corp. dividends are fully taxable and MLP distributions are mostly tax deferred. C-Corps are better suited for an IRA.

PAA's distributions were $1.44 in 2019 for annual yield of 8.8% based on the February 14 closing price of $16.38.

Based on my forecast, PAA's distributions are expected to increase by 5% in 2020 and another 10% in 2021 because their capex spending will be going way down. Distributable Cash Flow ("DCF") should double from 2019 to 2021.

My forecast model has been posted to the EPG website.

Dan, any sense on what is pressuring PAA? Of all pipeline companies, this one has a good dividend coverage ratio. They've improved their debt profile as well.

The only thing I can think impacting them is that supply from Permian is at risk with low oil prices. I have to think with connections going up to Canada, they can optimize pipeline usage with or without Permian over long-term. Am I missing something here? Near-term debt maybe?

Just overall fear driving the markets these days + U.S. oil production now sure to decline.